← Travis Makes Money
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- [00:00]
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- [00:31]
Travis Chappell
You're listening to the Travis Makes Money Podcast. What is going on moneymakers? Welcome back to the Travis Makes Money Podcast where it is our mission to help you make more money. Today we're going to be talking a little bit about franchising with my new friend John Austensen. John is the founder and CEO of Friendbridge Consulting, an Inc 5000 company and he's a top point one percent franchise consultant. John is also the author of the best selling book Non Food Mood Franchising. John draws on his experience as a former Inc. 500 franchise president and multi brand franchisee in helping his clients select their franchise investments. John is a frequent contributor on franchising for publications such as Forbes Inc. And Bloomberg. Guys, franchising is a unique way to start making some extra cash, especially if you're kind of new to the entrepreneurship world. I have a very, very small amount of experience with franchises, but we do, we do own one and my wife is running it basically every single day and it's been a cool way for us to get her into the entrepreneurial world without feeling like we're taking all of the risk of starting something from scratch. So excited to talk about this with John. Before we get into that, if you are tuning in, you're wondering how I go about building some of the relationships I have with the folks on this show or my other podcast. Travis Makes Friends, the Shaqs and the Rob Dyrdeks of the world and how I get in touch with those people, it's through the podcast. The podcast has been the unlock for me and but in addition to helping explode my network, it also grows my brand, sharpens my expertise piece, allows me to learn directly from people who would usually charge thousands of dollars an hour for the same thing that I'm doing for free. And it could pay you sponsorship dollars to do all the things that I just talked about. So for a limited time I'm opening up my calendar for one or two more one on one coaching clients so if you're already running a successful seven, eight, nine figure business and you are curious about what podcasting could do for you, head over to travischappell.com coaching we'll jump on a quick chat, see if it might be a good fit for one of those spots. Travischapel.com Coaching John Austensen what's up man? Welcome to the show.
- [02:32]
John Austensen
Hey, excited to be here, Travis.
- [02:33]
Travis Chappell
Hey, thanks so much. I love the topic of conversation. Like I alluded to in your intro, my wife and I do own a franchise and I think it is one of those paths that allows the either beginner entrepreneur or seasoned entrepreneur who's looking just to park cash, kind of a de risked risk, if that makes sense. So I want to ask you first off, before we jump into some of the specifics, how do you currently make money? John?
- [03:03]
John Austensen
Yeah, make money in multiple ways. I, I'm a believer in the all of the above strategy. So certainly I've got my core consulting business, I've got multiple franchise investments myself as a franchisee, but I also invest in real estate. I invest in, you know, hard money lending, I invest in energy, if certainly money allocated to the public market. So I'm in all of the above guy. And I do believe very strongly that, you know, investments, whether they they be in franchises or other active businesses, that just opens up the tax code and allows you to do so much more if you're a W2 earner or if you have a core business. So I'm right there with you and believing that a lot of people should get off the couch and explore business ownership.
- [03:41]
Travis Chappell
So when you started, obviously the thing that makes franchises more difficult to get into than just starting up your own service business or something is you have to have a certain amount of net worth or, or capital to be able to invest in the business. Before you had that capital, what were you doing to make money when you were first starting? What were you doing?
- [04:01]
John Austensen
Yeah, you know, like so many of your listeners, I spent many years working for the man, you know, building someone else's empire in the corporate world and had gone to grad school, had a great run, you know, very appreciative of that time, but, you know, had banked a good bit of, you know, decent amount of net worth by the time I did step away and it gave me some, you know, lead time.
- [04:20]
Travis Chappell
Well, to be fair though, to be fair though, John, sorry to cut you off, um, you said it banked a good amount along the way, and I think that's discrediting your financial Discipline that you put into place as a young man because probably a lot of people who are making the money that you're making didn't have any leftover by the time they were done. So can you talk before you move on? I don't want to glaze over that. Before you move on, can you tell me what your personal financial philosophy was during that time?
- [04:47]
John Austensen
Yeah, you know, I lived with my parents first year out of college, which was a hard adjustment, but, you know, was able to save the money to pay off my student loans and, you know, from there there, you know, ventured out and, you know, I got caught up with golden handcuffs, you know, stock options there in the corporate world, which it was privileged to have those. But at the same time, it kind of holds you in and some of the disciplines that, you know, certainly save more than you spend. I started investing in a Roth IRA probably when I was in college, you know, back during the dot com era. So. Wow. You know, definitely, you know, growing up, the money conversations were ones in my household that I knew I didn't want to have down the line. So I think there's a little bit of a. I think I've carried that with me. You know, I want to have different types of money conversations now where we're talking, we're the lender, not the, you know, being lended to.
- [05:32]
Travis Chappell
So. So I'd say it was obvious.
- [05:37]
John Austensen
Yeah, you know, it's, you know, living paycheck to paycheck. And you had great parents, very supportive of the upbringing. But, you know, I did go to a private school, but I joked I was the poorest kid in private school. And so again, you look around and you know, that early age you say, gosh, I want to, I want to build something, you know, that my parents didn't have. And it's great now that I get to support my parents and support other charities that we care a lot about. That's a big part of, you know, our giving strategy. So, you know, money is not an end in itself, but it's a vehicle that allows you to do a lot of good things.
- [06:08]
Travis Chappell
Well, it sounds like their investment in your education paid off for them.
- [06:13]
John Austensen
Yeah, absolutely.
- [06:15]
Travis Chappell
No, I say that because I'm a parent and I look at how much my kids schooling costs and I'm like, oh, man, I hope this investment that pays off at some point.
- [06:24]
John Austensen
Oh, no, our tuition just went up for my three kids. And so, no, I, I joke that you got to get back to work, Right?
- [06:31]
Travis Chappell
Yeah, exactly, exactly. Okay, so sorry I cut you off. So you, you had banked some money coming out of the, the corporate world. You're smart with your finances in that, in the meantime. So, so tell me about that transition period.
- [06:44]
John Austensen
It had that retirement plan in place and you know, cash savings as well, home equity, all the, the basics. But no, it was about eight years ago that, you know, I had the fortuitous opportunities, step into franchising and left the corporate world, big public company. Stepped in as president of Shelf Genie franchise system. Ran our home office day to day, supporting all these franchisees across North America. And that's where I fell in love with the franchise model because I saw how so many different backgrounds could get plugged into running a shared system and people with just variety of different backgrounds and we were supporting them, they were in business for themselves, not by themselves. We helped them be successful. And from there I spun off and invested in franchises myself, a franchisee and you know, started my consulting practice about six years ago just because I saw there's such a lack of awareness in the market of the types of opportunities presented in franchising because many people thought the F word franchise was synonymous with fast food. And so I love exposing people to so many hundreds of opportunities that exist in other industries outside of food.
- [07:44]
Travis Chappell
What was the first franchise that you got into yourself?
- [07:48]
John Austensen
Yeah, the first franchise was a pool cleaning business. And about the same time I got into a driveway business. Oh, wow.
- [07:55]
Travis Chappell
Okay.
- [07:56]
John Austensen
Over the course of time I've sold to other franchisees in the system. I've acquired from other franchisees in the system my current holdings. Today I've got a, and this is a good example, just types of industries. I've got a non sexy business that's asphalt paving, a line striping. So think parking lots. And it's a business, it's a franchise. I've got a business that provides temporary walls like retainment, containment walls around construction projects, renovation projects. I've got a custom orthotics business that uses 3D printing to produce custom inserts for your shoes. It's down in Delray, Florida. You know, we sell sandals and shoes as well. So again there's just such diversity. You know, clients are getting into things like home services, property services, health and wellness, kids, pets, seniors, all these types of things that regardless of the economy people are going to spend on. You know, they're kind of non trendy needs based businesses.
- [08:48]
Travis Chappell
Yeah. And they're. And they're not the traditional path that you think about when you think about franchising, which is I assume why you ended up writing the Book Non Food Franchising.
- [08:57]
John Austensen
Right, that's right. No, just exposing people not only to the industries, but how, how do the financials work? You know, how does the funding work? You know, how do you differentiate a good franchisor from a not so great one? Because just like every industry, you're going to have strong players, you're going to have some that aren't worth the investment. And so really try to pack a lot of content into about a 90 page book that's very readable. Just help people fill in the gaps and understanding around franchising.
- [09:23]
Travis Chappell
Yeah. Do you, do you believe that anybody can be successful with a franchise?
- [09:29]
John Austensen
No. Okay. No.
- [09:31]
Travis Chappell
What, what are the, what are the factors that contribute?
- [09:34]
John Austensen
There are some clients that are too entrepreneurial and they say, hey, why don't
- [09:38]
Travis Chappell
they do it this way, that way,
- [09:39]
John Austensen
you know, they think, they think they're smart, sky in the rim and they're not willing to follow, you know, someone else's playbook. You know, there are some people, I'd say the vast majority of could be business owners, but there are some that, you know, just don't have any drive. They don't, you know, if it was easy, everyone would be a business owner. Right. But I think that some people don't have the drive or in the case of franchising, the willingness to follow a system. When I was the franchisor at Shelf Genie, I looked across hundreds of franchisees all running the same business in their respective markets. Our top performers were the ones that followed the system. They're also decent with people. You know, they had to be someone that people wanted to work for, wanted to work with. If you're a total jack and then it's not going to be a good fit, but. Right. I'd say for the vast majority of business people, franchising presents a better path to business ownership.
- [10:28]
Travis Chappell
So when you are in
- [10:32]
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- [10:49]
Travis Chappell
obviously when you were the president of this, this particular, this particular company and you're, and you're seeing the data come in, you know, hey, our top performers, just the ones that follow the system, just come in and follow the system. That also has to do with how the systems ran, which you had direct control over in that particular franchise. So now being a franchisee of other systems, have you found yourself in a position where you're like, there is no system, you know, like, I need some more support here.
- [11:17]
John Austensen
Yeah. You know, and that's where we help our clients in their exploration. Because I have seen that firsthand. Right. There's some systems that have. Are very dialed in. There's some. They're still building the plane while it's flying. And so for me, it's so important that that leadership team contains not only industry experience, but also franchise experience. They brought in people that have supported successful franchisees in the past to understand that unique dynamic, inherent franchising. So, no, there are definitely some out there that, in some that I've been personally been exposed to where, you know, they don't have the marketing dialed in. They. They're still figuring out things on the operations side. Now a good franchisor is going to give some leeway to their franchisees to be innovative and try new things. That's oftentimes where the best ideas come from. But still, you can't run the brand off the rails. You've got to stay within the lines to provide that consistent experience. And again, that helps other franchisees. If you're not hurting the brand.
- [12:08]
Travis Chappell
What are some red flags as a franchisee that you could look out for when it comes to kind of scoping out these different opportunities?
- [12:18]
John Austensen
Yeah, there are times that a company could be growing too fast. You know, the leadership team, which I just hit on is a big piece for me. You know, if they have a small sample size on their financial representation, what we call the item 19 within their franchise disclosure document, we just want to take a harder look at that, because every franchise system has to start somewhere. But if it's a smaller sample size within the financials, you know, there's gotta be a lot of meat on the bone and there's gotta be a lot of wiggle room there in case things don't go quite as planned. Now, I'd say those are some of the main ones. Certainly when you're going through the process, if you talk to other franchisees in their system through what we call validation, you know, which is a great idea, you know, you want to make sure you're getting positive feedback from them. If they're not giving positive feedback, then that would be a red flag. You know, I encourage people, you know, do a little secret shopping in your local market before buying. You know, how are you going to compete versus other players? You know, what is that proposition that you bring? So, yeah, there are a lot of things, you know, on the flip side, I'd say, you know, the, the Positives of franchising in general. Of course, you've got the playbook, you've got the coach on the sidelines supporting you. Oftentimes it gets overlooked, but you've got a community of other franchisees living the same thing. So it's almost like a built in mastermind group where you're exchanging best practices. You know, obviously there could be synergies around your supply chain of services or products because you're buying in bulk. You know, certainly a shared brand can come into place. It's more important in some industries than others. But having access to large marketing data analytics. Right. Having a technology stack baked on day one just allows you to move so much faster through that ramp up phase than doing it by yourself.
- [13:55]
Travis Chappell
When you are looking at a franchise, is there a minimum number of locations open that you are looking at to be like, look, it's a promising concept. It's growing, you know, quickly but steadily. They got some, you know, their ducks in a row, but I think it's a little bit too early for me. Is there kind of like a magic number there or will that vary industry by industry or company by company or does it matter at all?
- [14:25]
John Austensen
Yeah, I'd say it's something we take into consideration. I won't say there's the magic number again. Everyone has to start somewhere. It's a little bit of science and art. There's a franchise that I'm invested in called Art of Drawers. I'm on the franchisor side as an investor.
- [14:38]
Travis Chappell
You said, you said Art of Drawers.
- [14:40]
John Austensen
Art of Drawers, Yep. In that particular system, the founder started a another business similar to that years ago, brought all that experience into this one. And so again, looking at the leadership team, what is their track record, what is their background? Probably is even more important when you have a small number of locations. So I'd say it's a little bit of science, a little bit of art. Our biggest challenge is that good opportunities move incredibly fast in good markets. And so oftentimes we are working with brands that don't have 100 locations yet because if they have 100 locations, they've sold out a lot of territories you'd want to be in. And so oftentimes it may be, look, businesses that have 15 locations, 30 locations, you know, and we just take a harder look at those. Again, there's got to be a lot of meat on the bone in the financial model to justify it. But you know, it's entirely free to work with our team and that's where we can add a lot of value is understanding what's going on behind the curtains. Hey, this one only shows five locations online. The fact is they've got 30 that they just sold in the past six months. They're getting ready to open and they're bringing in some stud owners with these types of backgrounds. That's kind of insight that we provide that oftentimes you don't get by just googling around.
- [15:49]
Travis Chappell
Give us, give us a glimpse of the type of money that you can make with a single franchise. Like, is this something that, that people can exchange their full time job for or is it kind of like, hey, you know, this first one, you might be able to bank 50, 60k a year profit, but you're not really going to, you know, experience these higher, higher revenue numbers unless you open up your third, fourth, seventh location.
- [16:19]
John Austensen
Like anything, it varies. We just had clients that bought 10 trampoline parks and these kick off about $850,000 to the bot piece. Now obviously that's a huge investment. Yeah. But they also, most of our.
- [16:31]
Travis Chappell
They kick off 850k in bottom line profit.
- [16:35]
John Austensen
Bottom line on 2.7 million in revenue. Yep. Wow, big numbers. But they cost three and a half million to open.
- [16:41]
Travis Chappell
I was going to say, but how much do they cost?
- [16:43]
John Austensen
Right. Most of our clients are not playing in that ballpark. I just wanted to give that example. A lot of our clients are getting into things, let's say in the home services space or in home senior care or youth soccer, you know, where your all in investment might be.125,000 to 250,000.
- [16:58]
Travis Chappell
Sure. And just clarify too. Sorry to keep cutting you off, John. I want to, I want you to clarify a little bit too, because even if you don't have business experience, a lot of times to get an SBA loan for something to fund your business, they're going to ask for like business financials. How long have you been in business? Show us your numbers. And if you're brand new, you don't have any of those things, especially if you don't have any real experience. So a franchise model is actually a little bit of a hack on that side too. Because, because you'll. The SBA is more willing to give debt on franchises than they are on brand new businesses. Because the success rate goes from 15 on a new business to like 60% on a franchise or something like that, right? Yeah.
- [17:44]
John Austensen
No, and there are varying numbers out there. I mean, a lot of the numbers would show even higher than that, but no, SBA loans are extremely common. Two thirds of our Clients will use them. Banks do tend to lend a franchises a lot more. And so we really don't run into too many of those issues. And you can always pay them back early. The interest is tax deductible of course, so those are very common to leverage up. You know, you still put in maybe 20% of your own capital and then use a loan, you know. But when you look at the from an investment standpoint, the franchise fee plus startup cost plus several months of working capital all grouped together, that all in investment like I said, oftentimes you may be 150,000 to 300,000. Kind of in that ballpark is where a lot of things fall. A lot of service based businesses. You know, it varies. I'd say oftentimes that break even point or your monthly P L turning profitable, it may be six months in, it may be nine months in. Some people can move faster than that. It just depends on different variables, you know. But from there, you know, it's usually your run rate by year two where it's like, hey, this is a great jumping off point. Some people will jump in full time. Probably half of our clients do early on. And obviously it's never going to ramp up like it will with the guy with the skin in the game running the business that you know, they're highly incentivized. So I'd say those typically ramp up a little bit faster. But if you are running a semi passive or using an executive model, which I prefer to call semi involved because you're still involved, that's where you put a manager in place. Day one. Obviously you're paying the manager so you know that profitability side is going to be a longer tail on the back end. But that is very common. Half of our clients put a manager in place to run the business while they continue their day job.
- [19:23]
Travis Chappell
Have you, have you seen that work? More or less depending on the industry type. Like I noticed. I know you wrote the book non food franchise. Do you have any food based franchises?
- [19:35]
John Austensen
Every now and then we'll do one. You know, we did a food truck concept recently. We look at some. But my humble belief is there easier ways to make money. We've got nothing against the food guys. We need them, we support them. But there's so many opportunities, require less capital, fewer employees, less operating hours. You know, they're less susceptible to consumer whims. You know, think about frozen yogurt. Froyo was big until it wasn't. Yeah, I don't like things that could be trendy. Right. So we like the non sexy understandable cash flow in businesses. That's kind of where we stick. But yeah, a lot of, a lot of different industries and I'd say some are more allow for that semi passive, semi involved model. You know, it just depends on the business and the support team behind it. So much of the success though comes down to having a good manager in place.
- [20:25]
Travis Chappell
Yeah.
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John Austensen
Someone that's incentivized and aligned with your interest. If you've got that, then a good franchise or on the sideline can carry a lot of that support water for you day to day. If you don't have the right individual, then you're going to have some headaches and you're going to find yourself leaning in. So I never want to sugarcoat that because it does take having the right person driving the car.
- [20:43]
Travis Chappell
Yeah, you still. The idea of passive income is a myth across all industries essentially. Until you build some, until you build something that makes it more passive. Right. Like even, even real estate investing. It's like if you know nothing about real estate, then don't just think that you can just put some money in real estate and make passive income. It's like you probably should deepen your knowledge of that space. Now eventually it might be 99% passive because you built a system and you have great people in that are managing the properties and helping you do your thing. But it's never 100% passive unless you're just independently wealthy and don't care. And I think that was kind of like the biggest thing that we've learned having our own franchise is that, you know, at first you kind of think like, oh, this would be kind of a good way to, for us it was like this, this is a good, a good vehicle to park some cash. When the real estate market's kind of weird, interest rates really high. You know, traditionally just like we look at real estate and it's like, well, prices are inflated. Rents, you know, are no longer covering mortgages like they used to. So we're like, oh, franchise might be a good place to park some, some capital. But the bottom line is like if my, if my wife weren't like she left her job to do this full time, if she did not do that, we would definitely be losing a, would still be losing money on the franchise for sure to try to try to get it up to a point where it's profitable enough and if she, if she weren't doing it, we would have to be also again, paying a manager. And when you're paying somebody to run this business, this is not a minimum wage employee. They're, they're, they're a significant expense that take a good amount of margin away from your bottom line. And like you said, they have the ability to either make the business or completely break the business. So if you have zero, zero experience operating whatever a food place or a service business or something like that, and you're just expecting that the manager is going to know and you don't have any idea how to hold them accountable to metrics because you've never done this before type of a thing like it can you put your, you can get yourself in a really sticky situation like pretty quickly. So yeah, I always like to highlight that, that like look, there's no such thing as passive income. At the end of the day, the manager didn't put the money into the business. So they are not the ultimate person that's in charge that's responsible for the outcome of the business. It's you. Like you are, you are the, the person ultimately that's going to decide whether or not this thing's going to be successful. So you can't just plug and play and then just keep doing your thing and then just trust everything's going to work out because it's probably not going to work out that way. It might take you six managers to find a good one. And in the meantime, you better know what the difference between a good one and a bad one is. They gotta have some contrast, some, some ability to measure their performance by so that you're not just again just sitting there thinking that they're taking care of it. And then you look at your p l after 14 months and realize that you're just losing cash like bleeding capital. And then all your excess money that you used to put into your 401k is now going into this franchise that continues to lose money. I sell that just to say like you gotta still be on top of things.
- [23:55]
John Austensen
Yeah, 100. And like I said, if it was easy, everyone would be doing it. But it does take, you have the ability for outsized returns. You have the ability to take advantage of the tax code. As a business owner's written in favor of the tax, you know, the business owner. But the trade off is that you are having to put time into the business. Absolutely. And some of that time is evaluating and holding accountable that manager. You know, the great thing is with a strong franchisor, they're kind of tag teaming it with you. But still the buck stops with you as the owner. You're exactly right. So it is interesting A point that you made. And I mentioned this. Oftentimes so many of our clients do invest in real estate as well. I mean, myself included and especially with the environment we've been coming out of or may still be a part of, lower inventory, higher interest rates, you know, franchising does provide kind of a similar avenue for that tax advantaged mindset that's looking for alternative investments. So we do probably two thirds of our clients invest in real estate as well. So you've got the passive income and the active income of the business and there's a lot you can do tax wise with that.
- [24:53]
Travis Chappell
Yeah, I really like the idea of the service based models. I talk about this a lot on the show. I just think service, service industry, the service industry to me is probably the last one that's going to be replaced by automation, AI, robots, whatever's coming down the pike here, you know, ultimately. But there's going to be so, so much time in between now and a time where a robot using AI is trained to fix your plumbing, you know what I mean? Like there or, or you know, repair your H vac or you know, clean your carpet or whatever, you know what I mean? Like there's just, there's going to be some time before, before these things have giant disruptions like that. Whereas there's other industries that are getting decimated and will be decimated the next decade due to the advancement of AI. Even, even industries that are traditionally been very, you could be bullish on. You know, going to law school used to be a path to make good money for your entire career. I don't think that's going to be the case anymore. You know, like in the next decade or so. I gotta imagine a majority of legal work is going to be done by AI with just a couple of lawyers that are like doing quality control, you know what I mean? Until the quality control is also done by AI. Because like there's no way that, that any individual attorney can know more than an AI who can, who can reference anything in history in a half a second. Like it's just, it's impossible. Like we're not gonna be able to keep up with those things. Whereas you have these, these other, these service based businesses, window washing, things like that that are just like, it's not going to be done by other things for quite some time and it's probably a safe place to get into lower startup capital involved to get, to get started. And then when you're in an area you like, you have unlimited scalability within that area, you're not limited by the, the retail box that you lease, I guess is what I'm trying to say is that, is that you can, you can have this smaller lease payment on office space or you can have your office space be your house even, probably, and then you can, you can scale the revenue before you have to worry about increasing your hard expenses to run it. So the service based thing really, really does intrigue me a little bit more even than some of these other concepts. Yeah.
- [27:11]
John Austensen
And I'd say probably two thirds of our clients are going to service based businesses. They're not, they don't have the customer facing retail component. We, we still have quite a few of those, but I know people like that idea. I mean, and again, some of those categories, whether it be in home senior care or add on services catering to that silver tsunami of the older population or you know, youth sports and tutoring or you know, mobile pet grooming or, you know, there's just so many. And within home services it's everything from gutters to flooring to dumpsters to, you know, kitchen remodeling. You know, just things that people are going to spend on that like you said, could use AI and how they bring the, the product to market and service to market, how they do the scheduling and the routing of the marketing and lead generation. But they're never going to be replaced and they're not going to be replaced by Amazon in most cases either. Yeah, yeah, yeah.
- [27:58]
Travis Chappell
And the AI and those other parts of the business are very helpful for the business owner. They just help you decrease cost. They're not, they're not taking away market share from you. They're just helping you do your job more effectively, efficiently and with fewer employees. What are like, somebody's listening to this right now. They have zero business experience. They have a, you know, $65,000 salary that they worked hard to, to get to. They don't have a college degree and they're looking at like, man, how do I, how do I take a little bit? I got 30 grand saved up and I, and I want to, I want to pursue this, this whole entrepreneurship thing. What are a couple of like the, the concepts that you think are the ones that are most worth looking into based on your experience? The ones you've looked into, the ones that you own.
- [28:42]
John Austensen
Yeah. And I had a conversation with a gentleman a few months ago. His net worth was right around 30 or 40,000. You know, what I shared with him was it's probably not time just yet to jump into a franchise business. You know, I don't want to set false expectations. I'd say, you know, until that net worth gets to be at least a hundred thousand. You know, once you hit a hundred thousand, especially 150, 200, that starts to open up opportunities. Not that you're putting all that money in again, oftentimes it may take 50,000 in cash plus an SBA loan, you know, but you just want to make sure you're not stretching too far. So I'd say have 50 to 60,000 liquid and a net worth of at least a hundred thousand, then it's time to start thinking about it. But no, I'd say the service based models, I mean there are opportunities that are sub 100,000 all in investment. You know, it could be, you know, I think of like a B2B service. You know, we have one that's business coaching. We've got, that's very low investment. We've got one that is cost mitigation. It's working with small and medium sized companies, helping them reduce costs. You get a percentage of that savings. You know, some of those I mentioned, like, you know, it could be, you know, pet grooming or youth sports. I mean just using those examples, painting, you know, things where it's a high variable cost model, you don't have a lot of overhead. Yeah.
- [29:50]
Travis Chappell
And certainly the more variable cost, meaning that your cost only increases as your revenue increases.
- [29:57]
John Austensen
Exactly, exactly.
- [29:59]
Travis Chappell
Well, listen man, this has been a fascinating conversation. I love this, I love this stuff. Just because again, what are like if you're not that, that person, if you look at, look around at all the entrepreneurs that you know and you go like those dudes are crazy. Like there's no way I would, I would risk that or do that or take that chance or whatever, you know, but good for them. But also I want more money. And it seems like the only path to do that is to start a business. It's just like you maybe could use this as the opportunity. Even if you don't become the number one franchisor or franchisee for, for a particular brand and you open 100 locations, like it could be just a de risked way of getting your feet wet in the realm of entrepreneurship. There's so many things to figure out when you start a business and most of the time it's underestimate. Everything else is underestimated. It's like you, you have a skill, right. You know how to whatever fix a AC unit or you know, you know how to put together a youth sports program or maybe you worked for the city for a while. Doing youth sports and you're like, oh, maybe I could do this youth sports franchise type thing. It's like, well, you know that one thing really well, but you've never examined a P L and you've never hired or fired your own employees and you've never worried about marketing or you've never had to sell anything. It's like that you, there's so many skills to learn that make the entrepreneurship rate of success so low over a 10 year period that if you can kind of get some of those things just handed to you inside of an ecosystem, it, it just has a significant impact on your ability to make that business successful and then also have a, you also get like a pool of buyers for the business if you want to get out. If you're in a franchise model, you know what I mean? Like there's, if you, if you have a franchise or two in a particular region in a thriving franchisor is the partner in that. It's like, well, if you build those businesses well and successfully and you're like, ah, it's been four years, I'm kind of sick of doing new sports, then there's probably a bunch of buyers that are like literally built into that ecosystem. People who are looking to expand their region or territory or even corporate that's coming in and being like, yeah, we'll take those ones off your plate. You know, like, you don't have to do the traditional path of oh man, I, I gotta go shop buyers now. I gotta go find somebody who's willing to buy this business, you know, and you, you have this established brand and you have a bunch of people who are like, ah, actually I might be interested in that.
- [32:18]
John Austensen
Right? Yeah. And that's what you call it, internal M and A. It's buying other franchisees within the system, expanding your footprint or potentially selling to them. I've personally been on both sides of. And yeah, I think again, oftentimes it gets overlooked, but it is a very nice mechanism when the time comes to expand or to, you know, to exit.
- [32:37]
Travis Chappell
What are, what's the worst downside of a franchise? There's downsides to every business model. There's everything that involves risk, there's potential downside. What, what are some things that maybe we're not thinking about?
- [32:49]
John Austensen
I'd say one, you know, again, if you're too entrepreneurial, if you don't like following directions, if you don't like staying within the lines, you know, that can be a downside. I'd say secondly, getting in with the wrong franchise system. You know, franchising is just like every industry in that they're good players and they're ones that are not as strong. And ultimately it's almost like a business partnership. You know, partnerships can be great till they're not. You know, with franchising, that's where we come in to help our clients identify, you know, the opportunities that could be the best fit for them that also have a strongest likelihood of success down the line. Because it is important that you, you know, you marry the right partner. And so I'd say if you get in with one that's not providing the support that they gave you, the expectations that they'd be providing up front, then, you know, then that could be a bad marriage. So I'd say that's probably the biggest thing. You know, again, that's where we come in to try to, you know, mitigate that risk as much as possible.
- [33:39]
Travis Chappell
That's essentially your job as a franchise consultant.
- [33:42]
John Austensen
Correct?
- [33:43]
Travis Chappell
Like people go to you and say, hey, like third party objective person. Instead of like if you're talking to the salesperson of the franchise, like they have a lot of incentive to get you to buy their franchise. And whereas you go to a third party party, someone like a John, these franchise consultants that have popped up and you say, hey, here's my situation, here's the areas or verticals that I have knowledge or experience in, here's my finances. What's a good path for me? Then you can go to somebody like John. And John can be like, hey, well, based on what we've seen and the franchise that we've worked with, here's some that we believe are really strong franchise partners that will fit within your startup capital range and also leverage an area of expertise of yours that you could, that you would have an advantage on this business versus these other businesses. And so they come to you basically to figure out where you're, you're essentially a matchmaker for franchisees, franchisors.
- [34:41]
John Austensen
I'm a real estate broker, but for franchises. And we work with over 600 different franchise companies, part of the largest brokerage in the US and these companies consist of most of those out there. They're looking to expand the stuff, good markets to expand into. And you know, at any given time there's probably 50 or 60 feel strongest about just having been a franchisor myself. And I am a multi brand franchisee. So looking through those lenses, you know, but there's nothing more rewarding to me. Where I get my validation is helping clients and then they come back and Buy additional locations down the line because they had such a great experience or they come back and you buy additional brands or they refer their brother to me. I mean, that's where I get my validation and what I do.
- [35:19]
Travis Chappell
Love it. John, where can people go to find more about you? What you got going on? If they are interested in this and they want to have a chat, where can they go?
- [35:26]
John Austensen
Yeah, come out to our website. Franbridge consulting.com F N Bridge consulting.com I'd say as a first step, you know, feel free to share your email address. We'll share a copy of our book Non Food Franchising with you. You know, it's a great primer to kind of fill in the, fill in the spaces in your understanding and learn a little bit more. And if you'd like to take next step, you know, just indicate that when we reach out and we'll set up a call and yeah, more than happy to, you know, walk you through the process and educate you on franchising and identify the top opportunities open in your market.
- [35:55]
Travis Chappell
Branbridge consulting.com Go check out John and some of the stuff he's got going on. Get a copy of his book. John, thanks so much for doing this. I want to move into the last segment here. Just a quick, quick random questions, quick random answers. You ready?
- [36:08]
John Austensen
Let's do it.
- [36:09]
Travis Chappell
What profession other than your own do you think it'd be fun to master?
- [36:13]
John Austensen
Yeah, I'd love to be a professional golfer. That'd be outstanding.
- [36:15]
Travis Chappell
Yeah, Me and you both flex and fail. Tell me a purchase you've made. You're super stoked that you made, made flex and purchase that you've made that you were like, that was stupid. I shouldn't have bought that. It could be like, you know, anything from five bucks to 50 grand, it's only up to you.
- [36:31]
John Austensen
Yeah, you know, I'll stick in the health and wellness category just because that's where a lot of big purchases.
- [36:35]
Travis Chappell
You know what?
- [36:36]
John Austensen
I'll take that back. I'm looking out the window and I see we've got artificial turf around our pool and in our backyard. That was the best investment we ever made. Our kids absolutely love it. It just holds up so well. My son and I chip golf balls. We have a lot of fun on it. The. The other one, which was actually a really big purchase. I bought a mountain house about a year ago. And, you know, we've Airbnb at some. Well, it's an hour and a half from our home. We thought we'd use it a lot more than we have. And we're just not getting up there enough. Our kids are young, we're active here in Atlanta, and so in hindsight, there probably wasn't the right timing to pull the trigger on that. So thinking about what to do next?
- [37:10]
Travis Chappell
Yeah, got it. If you could sit on a park bench with someone, past or present, chat for an hour, who would have been,
- [37:16]
John Austensen
I would have to say our current president. I, I've never seen anyone, you know, like him or hate him. You know, I won't get political here, but he sees a lot, he knows a lot of what's going on in the world. And I've got a few questions for him.
- [37:30]
Travis Chappell
How do you like to learn best? Books, blogs, audiobooks, podcasts, YouTube videos, newsletters.
- [37:36]
John Austensen
I love podcasts. Second would be audiobooks, but number one, be podcasts. I listen to them, you know, when I walk the neighborhood, when I exercise and kill two birds with one stone. And for me, that gets the juices flowing mentally.
- [37:46]
Travis Chappell
Like, what's a good money making podcast that you'd recommend?
- [37:49]
John Austensen
Well, certainly love your, your podcast here, but you know, entrepreneurs on fire, you know, I've been on there a number of times and JLD brings a bunch of great guests on. So I always love not only going on the show but also listening to the guests.
- [38:02]
Travis Chappell
What is your go to Pump up song, John?
- [38:05]
John Austensen
Good Pump up song. It would have to be Journey, Don't Stop Believing, Back to College.
- [38:11]
Travis Chappell
Yeah, that's a timeless one. It's timeless. What is something that you are not
- [38:17]
John Austensen
very good at at not very good
- [38:19]
Travis Chappell
at
- [38:21]
John Austensen
slowing down and taking time to relax. I'm working on it, but I'll go on vacation and my mind's still going. I'm thinking of business ideas and for me, that is relaxing. But I think I could get better at being present. Kids are young, need to do a better job being present. So remind myself of that every day.
- [38:40]
Travis Chappell
We've been talking with John austinson from franbridge consulting.com. head over to the website, pick up a copy of his book, learn about all things franchising, See if this might be a good way for you to add some additional income to your life over the next couple of years. John, thanks so much for doing this. I appreciate you everybody else tuning in, listening. Remember, money only solves your money problems. And then you're just left with the problems that money can't solve. But it's a little easier to solve those problems with some money in the bank. So let's solve that one first. Here on the Travis makes Money podcast. Thanks so much for tuning in. Catch you in the next episode. Peace out.